Peers Inc

* Book: Peers Inc: How People and Platforms Are Inventing the Collaborative Economy and Reinventing Capitalism, by Robin Chase; Headline/PublicAffairs, 2015

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Description

From Library Journal:

“Chase gives historical insight into her cofounding of ZipCar (with Antje Danielson) and how the flexibility and ingenuity of the public allows for new business models to be developed. She explains the importance of combining the right set of skills within each business to be successful. It is the collaborative economy that will influence capitalism to reevaluate, if not reinvent. Chase also addresses the reluctant nature of big business to change owing to higher management being heavily vested in assets and discusses how to influence this group to shift their thinking. The entrepreneurial enthusiasm throughout is contagious and inspiring with the emphasis being on collaboration and skill gathering. It isn’t as important for one person to achieve a final product as it is to allow for specialization and growth. Technology, specifically the generation of the platform, remain a constant theme, as a structure and as a method of interaction.

VERDICT Highly recommended for anyone studying business, economics, or user experience. An engaging and quick read on collaboration and the new capitalism.”

—Library Journal, Meghan Dowell, Beloit Coll., WI

Excerpts

From chapter 9

Robin Chase:

"If wages had kept pace with productivity gains since the 1970s, on average they would have doubled! In fact, productivity rose more or less continuously between 1945 and the pre sent, but wages remained flat from around the early 1970s. For what ever reason, the rich got richer, the poor got poorer, and the benefits of improved productivity were not widely shared.

Chapter 8 concluded, as did Chapter 5, with a strong prediction that we are going to see a significant part of the world economy transform into platforms (the or ga niz ing structure) and peers (the participants). Peers Inc is going to bring incredible productivity and efficiency gains. If capitalism is broken and productivity gains aren’t shared, that leaves the 99 percent of us with a very unpleasant outlook. This cannot become the template for the Peers Inc transformation. We have to find a better way.

...

Many types of companies are impossible to finance by bootstrapping, which involves using earned income to grow the business. And there are times when competitive pressures can force companies that might have been able to grow organically by using their own revenues to instead expand faster and therefore bring in outside capital in order to compete. Some platform found ers and their investors can have good intentions about the values they want to embed in a com pany, but hypergrowth, requiring lots of capital, can dramatically curtail the power and therefore the flexibility of the found ers and undermine their intentions. Ultimately, those who finance platform building will control it.

The Peers Inc framework thrives when peers are motivated to contribute. Platforms that do not adequately reward peers, value their contributions, and invest in their innovative potential will fail in the long term. Yet capitalism— with private investors interested in getting their money out of their investments as soon as possi ble and public com pany stock prices dependent on quarterly earnings— doesn’t care about the long term. Restating this chapter’s guiding question: How do we finance platforms to permit large investments while also making sure that peer power is preserved and peers as a group share in the significant value created from the collaboration?

Broadly speaking, there are three options for financing the building of platforms: public financing, private investment financing, and crowdfunding.

...

Porter and Kramer make a business case for “the princi ple of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges.”5 While waiting for that shift in business culture to happen, the beneficial corporation, or B corp, has emerged. It is a new or gan i za tional structure, legally recognized in twenty- seven states, with social and environmental goals, as well as financial ones, tied into its formal requirements. The North Face, Patagonia, Etsy, Warby Parker, Seventh Generation, and Change . org are B corps that you might recognize. Their CEOs can come and go, but these companies still need to meet all three requirements that are built into their charter: financial, social, and environmental.

Peers require substantial trust in the platforms they use as the basis for their economic livelihood (see Chapter 7). The conventional for- profit com pany may find that there are substantial costs in gaining and maintaining the trust of the very people that it relies on for its inventory of assets to share. The B corp and similar cooperative corporate forms found in Eu rope (such as the United Kingdom’s industrial and provident society) may provide the necessary backbone of trust by legally binding the administrators of the platforms to do what is best for the peers, not just the investors. The result of this approach is for- profit companies that peers can trust to represent their best interests, even if there are occasional tensions as short- term and long- term interests clash."

Discussion

Why you should read thd book

JP Rangaswami:

"An aside about reviewing books. I’ve tended to avoid summarising a book while reviewing it; instead, I try and explain why I like a book, referring to what it contains as needed but not actually detailing that content. Some of you may prefer to read a summary, in which case I will have failed you.

Peers Inc is fascinating firstly because it forms a bridge, a nexus, connecting many disparate threads, covering the “wide, interconnected area” I spoke of a few paragraphs ago. [If you want a bibliography of books to read in this context, then the one at the end of this book is a good place to start. If you want more then feel free to DM me @jobsworth on Twitter].

The most important bridge it covers is one that covers the Peers and the Inc, the essence of the title. Too often, dialogue in this space decays into dissonance. The usual polarisation of Big Bad Corporate and Pinko Utopian Treehugger, a debate which ends with everyone losing. This time the story ends differently.

Robin converts this continuous conflict, using everyday examples, into a collaborative framework where individuals and institutions can work harmoniously together. We’ve all been used to a Centralise What Is Common Federate What is Different approach in many parts of life; what the book does is to provide us an elegant yet practical way of dealing with the tension, all in the context of a hyperconnected world.

The book shows us, through a number of diverse examples, how platforms with industrial characteristics (representing the Inc) create value in partnership with talented people (the Peers) by making use of “excess capacity”. Robin calls these the “building blocks”.

George Gilder used to say that every economic era is characterised by its own unique abundances and scarcities; to succeed, businesses must make use of the abundances as well as the scarcities. Peers Inc frames “sharing” as “tapping into excess capacity”, a liquefaction of locked-up assets that allows value to be released and accreted. This is an intriguing construct, allowing for further consideration of the “excess”. What happens if someone makes capacity available sacrificially, when there was no excess to speak of? It is still sharing, but then it moves towards David Sloan Wilson’s views on altruism. [I am now part way through reading that for a second time, fascinating].

There is then a lot of rich detail on “execution” : what to consider when building platforms, how to identify excess capacity, how to attract peers, how miraculous things happen when these three come together. Those of you who are familiar with Sangeet Paul Choudhry’s and his colleagues’ work on Platform Thinking will find some encouraging connections; there are similar tangents with the works of Schmalensee and Evans on multi-sided markets. What’s exciting is that Robin looks at all this with a fresh perspective, one that combines the power of individuals and of institutions.

I was particularly taken with the way the book deals with the value of peer activity, how peers speed up innovation. Visions of Doc Searls wandering around as a sage incanting his NEA mantra “Nobody owns it, Everyone can use it, Anyone can change it”. A lot of people have written about platforms before; what this book does is to explain the symbiosis with peer activity really well.

The third section, on transforming our future, is where I did the most scribbling. How to take the ideas in the first bit and the lessons in the second bit to try and make an impact on our lives, on those of our children, and on those of our children’s children. [Having recently become a grandfather, this means a lot to me personally].

It’s written as if it was a challenge to the reader. Ask not what your world can do for you. Ask what you can do for your world, especially for the generations to come. That’s my paraphrase, so don’t blame the author for it.

Which is why, once I understood Robin’s climate change motivation, I found myself thinking seriously about the water issue as well. Generations to come. And that brings me to my next point in this review. Participation.

The book represents the start of a journey I’m going to enjoy being part of. Every one of you can do that as well. Just go here.

At the end of the book, Robin presents us with a number of conclusions, all worth reading and spending deeper time on. I am particularly interested in one to do with taxing heavily at the platform level. There is a need to ensure that the value generated by the miracle of the building blocks does not go disproportionately to the platform; without that, inequality must rise. Up to now, I have worked on the belief that there is a self-correcting mechanism in place: if peers don’t share in the wealth generated, the platform runs out of steam over time because the demand side dries up. It’s something I need to pore over, which is why I will be reading it again soon." (http://confusedofcalcutta.com/2015/05/10/why-you-should-read-peers-inc/)

Review

Andy Sharman:

"Chase made her name as a mom-of-three in Massachusetts who in 2000 co-founded Zipcar, a car rental upstart and one of the pioneers of the sharing movement. She also tried and failed to set up GoLoco, a carpooling service.

In Chase’s vision, the new economy is based on people (the peers) choosing to participate in a platform because a company (the inc) has made the process cheap and straightforward.

These companies thrive on excess capacity — say, a car, sitting on the driveway for 97 per cent of its lifetime. The collaboration of the peers, offering myriad assets in different locations, gives the companies phenomenal flexibility and explosive growth potential.

That is a challenge for old-style industrial businesses, particularly those stuck in the quarterly reporting cycle. It is also a challenge for society, meaning fewer jobs and less job security. Self-driving cars, properly commercialised, would put at risk the driving jobs that make a living for millions.

“We need to create new social mechanisms to spread out the gains of the new platform economics — perhaps even a basic income allotted to every person,” writes Chase. “Without this, the social consequences could be dire.”

Underpinning Peers Inc is the sort of messianic vision that could come only from a founder. For Chase, the shift to a collaborative economy is not about moving with the times and embracing fashionable tech disruption. The threat of climate change means this is a question of life and death, she writes. “We need Peers Inc because sharing of physical assets requires the least amount of stuff to sustain the greatest number of people.”

Peers Inc is perfectly timed and convincingly argued. It is also exhausting. In little more than 250 pages, Chase crowdsources case study after case study. I counted 81 companies, start-ups and platforms mentioned in the opening third of the book. Despite being a business journalist, I had not heard of half of them." (http://www.ft.com/intl/cms/s/0/8007eb5c-0436-11e5-95ad-00144feabdc0.html)